Bad credit and job prospects in New Jersey

Aristide Economopoulos State Sen. Nia Gill has fought the allowance of companies to check the credit of potential employees.

By Nia H. Gill

There are certain questions we expect to hear during a job interview — such as inquiries about job experience or education. But interviewers seldom ask candidates about their payment history on school loans, their credit card balances and whether a mortgage payment has ever been missed.

However, a growing number of businesses are obtaining this information through credit checks and using it to root out applicants they consider too high-risk to bring on board, making assumptions that they’d be unreliable or untrustworthy based on their financial past.

The reality is, credit checks give little insight into how an employee will perform. Instead, this kind of hiring practice keeps applicants who otherwise would be qualified for a position out of a job, and prevents those who are still in debt from ever being able to pay it off.

It is no secret that the current economic climate has affected residents at all income levels. People who have consistently held regular jobs have been laid off, and residents who have long maintained good credit are for the first time missing payments on their cars or on their houses. Homes are in foreclosure and people who never expected they would be unemployed are now in debt.

Right now, roughly 1 in 10 people are out of work in New Jersey, and many have been jobless for months. To base employment on a candidate’s credit history when there is no relationship to the position at hand is simply unfair.

Consider the number of people this affects given that more than 60 percent of employers admit to performing credit checks on job applicants.

And when an employer pulls a credit report, the applicant’s financial history becomes an open book:

They obtain access to payment history on credit cards, school loans, medical bills and deeply personal information about whether an applicant has ever filed for bankruptcy or been sued.

The information employers receive from these often unreliable documents are rarely cross-checked. According to the Society for Human Resource Management, more than a third of employers say they don’t even allow job candidates to explain the results of a report before making their final decision about whether or not to make the hire.

Washington, Hawaii, Oregon and Illinois have all banned the use of credit reports for hiring, and according to the National Conference of State Legislatures, 20 states and the District of Columbia have introduced bills this year to limit the use of credit information in employment.

The state Senate last week passed a bill that I sponsored to put an end to employers obtaining or requiring a credit check for the majority of employees, or discriminating on the basis of a job applicant’s credit history.

My legislation is designed to level the playing field for job seekers who are already facing increased competition in a shrinking job market and end the ongoing practice of denying someone a job — not due to a lack of qualifications, but simply because they were unable to pay their bills on time.

I have worked with New Jersey businesses and the banking and financial services industries to ensure that if, in fact, there is a bona fide reason and it has a relationship to a job’s responsibilities — such as a managerial position that involves setting the financial direction of the business, or one that involves access to financial information — then the employer may use a credit check. An inquiry may also be performed if the law requires it, or if an employee is suspected of engaging in illegal financial activities in the course of his or her work.

But we can no longer permit credit checks as a general hiring method to be used by employers.

Given that today’s economy has impacted the credit of so many people, allowing this practice to continue would prevent New Jerseyans from ever recovering from the devastating and hurtful effects of the global recession.

State Sen. Nia H. Gill (D-Essex) is chair of the state Senate Commerce Committee. Join the conversation at njvoices.com.